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Friday, May 20, 2011

"Confidence" game

~ "Today I Shop, Shop!..   Tomorrow I Return, Return!"

Every month a report is released by the US Consumer Price Index stating the overall state of the US consumer in terms of confidence in purchasing, consumption, etc..

The most recent report won't be released until next week but I thought it was quite humorous to read their previous findings- as dramatically inconsistent month to month as an index could possibly be.  For instance, on their website for April's report, the header reads: CDI significantly down – a double dip might materialize, if oilprices continue to rise!

Hmm, that's bad... now the previous report in late March had the headline: US Consumer Demand back on track! 

Hmm.. that's good..  but wait.. look at what the headline of February's report stated:  The momentum seems to be running out!

Let me re-state that more clearly:

   Date                                  CPI report headline
Feb. 2011                The momentum seems to be running out!


Mar. 2011                US Consumer Demand back on track


Apr. 2011                CDI significantly down – a double dip might materialize...


I'm guessing May's headline will be something like  "US Consumer stronger than EVER" followed by June's headline of "Lowest US Consumer Demand since 2008"

And if I was a corporate news agency, I might report each finding as such:

Feb 11: "Recovery is strong but CPI says momentum may possible slow"

Mar 11: "US Consumer Demand keeping Recovery going"

Apr 11:  "CPI warns of consumption double-dip- will Recovery be affected?"

And if I wasn't a lazy journalist, I would look this chart from the CPI website:



And from this 10 year chart showing personal consumption expenditure (2001-2011) I could see that the index has not altered or improved in any meaningful way since mid 2010, and is still dramatically lower than 2002-08. I would then surmise that this so-called "confidence" by the consumer is fragile and weak, and no one should ascertain "Recovery" from the data, nor pay any attention to the monthly findings until one saw evidence or true growth or decline.

The simplest way to tell when the nation is in Sincere economic recovery? -  It will be so obvious and apparent, you won't need the news to tell you of it.

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